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Monday, 2 June 2014

Burma Factories Warn of Rise in Strikes Fueled by Activists

RANGOON — Representatives of Burma’s garment-makers say that prominent former political prisoners are getting involved in labor disputes, and warn that more strikes are likely in the run up to national elections slated for late 2015.

Kazuto Yamazaki, Deputy Managing Director of Famoso Clothing Co., Ltd, a garment factory located in northern Rangoon and employing 1,200 workers, said that many of the city’s strikes “are initiated by political groups.”

Yamazaki said that members of the 88 Generation Peace and Open Society, a prominent group of former student dissidents and political prisoners, participated in an arbitration meeting chaired by the Ministry of Labor, Employment and Social Security, after workers at Famoso went on strike last year in pursuit of a wage increase.A representative of the management committee of Rangoon’s Hlaing Tharyar Industrial Zone, who spoke on condition his name not be disclosed, said that political and activist groups were getting increasingly involved in industrial action.

“At first the strikes were about wages, but then later we see the outside groups get involved,” the representative said, declining to cite particular parties or groups.

Asked about claims that the former political prisoners were agitating workers, Mya Aye, a prominent 88 Generation member, said, “this is wrong information, wrong news.”

Mya Aye told The Irrawaddy, “We want to have better labor rights in our country, but we also know that we have a market economy, and we have to create jobs, and we do not plan to make problems for businessmen, for employer.”

Under Burma’s long-ruling military junta, strikes were taboo and trade unionists were jailed and deemed “terrorists,” but the civilian government headed by President Thein Sein has passed laws allowing unions and industrial action.

Strikes have become more commonplace since 2012. Warning that more are likely this year and in 2015, Yamazaki said, “The elections [scheduled for late next year] are coming. They [political parties] need votes.”

In March, the Union Election Commission warned parties against trying to exploit social and economic issues such as electricity shortages and factory strikes ahead of the 2015 elections.

Nyan Win, spokesman for the National League for Democracy (NLD), the main opposition party and leading contender to top the polls in 2015, said that the commission was over-reaching.

“Strikes are not a concern of the Election Commission, so I don’t know why they said this,” Nyan Win told The Irrawaddy. “Perhaps some political groups get involved in strikes but I don’t know of any.”

Okkar Thein, Assistant Director at the Ministry of Labor, Employment and Social Security, said that he was not aware of any attempts by political groups to interfere with organized labor activity.

“I think many of those workers who take action are not experienced in doing so. Therefore it is possible that they contact the civil society groups, the activist groups, for some advice, some leadership,” Okkar Thein told The Irrawaddy.

Similarly, Myint Soe, Chairman of the Myanmar Garment Manufacturers Association (MGMA), an industry group, said that if outsiders were getting involved in garment sector strikes, it was at the request of workers and trade unions.

“When the strikes happen the activists and political groups get involved afterwards,” Myint Soe said, citing Burma’s long years of political oppression and restrictions on forming groups such as trade unions.

“The workers have not lived in a democracy for long and do not know their rights,” Myint Soe explained. “So it seems that when the cost of living goes up, the workers seek wage increases, and activists are asked to assist.”

The International Monetary Fund warned in early 2014 that while Burma’s economy would likely grow between 7-8 percent over the coming three years, a 6 percent inflation rate was likely.

Kavi Shankar, the World Bank’s Burma country manager, told The Irrawaddy in February that “if you have high growth you have to be concerned that you don’t have high inflation, which disproportionately affects the poor.”

Rangoon is an increasingly an expensive city to live in, with living costs rising in tandem with public sector wage increases. This in turn puts pressure on private sector wages and increases the likelihood of strikes.

According to the Oxford Business Group, a research company, garment-makers basing themselves in Burma will need to be mindful of the political repercussions of wage disputes and strikes.

“Even though companies would like to save money, they know they need to pay a living wage or face pressure from activist shareholders, non-governmental organisations and customers,” the group said in its The Report Myanmar 2014, published earlier this year.

A 2013 survey undertaken by the Myanmar Labor Union attributed labor disputes to low wages, and added that poor salaries incentivize corruption and result in children missing school as parents cannot afford fees.

The Burma government plans to implement a minimum wage in 2014, but in the meantime has asked garment factory owners to increase worker’s salaries annually.

“We agreed to do this and we will increase the wages for our workers by 10 percent in July,” said Yamazaki, who added that his company gives staff a 500 kyat ($0.50) daily food allowance, on top of wages. “We are not stingy, we are ready to pay,” he said.

Yamazaki was addressing a gathering of current and prospective investors at Rangoon’s Parkroyal Hotel—including representatives of Cambodia’s lynchpin garment sector, which employs 600,000 people and is the country’s biggest export earner.

Burma has high hopes for its own garment-making industry, with the MGMA estimating that around 200,000 people, mostly women, are employed in the sector—numbers that should increase as more garment-makers set up shop.

While heavy industry and manufacturing investment has been slow to come to Burma due to the country’s laggard power supply and poor roads, the garment sector is seen as likely early growth prospect – and in an export earner and job source in a country where unemployment was estimated to be 37 percent by a parliamentary commission.

Prior to the sector coming under western sanctions, apparel rose to make up 40 percent of the total share of Burma’s exports by 2000, according to a 2013 paper by the Institute of Developing Economies, part of Japan’s official trade agency, JETRO.

The same paper said, “With its abundant supply of low wage labor, Myanmar has an apparent comparative advantage in labor-intensive industries.” Burma’s government is offering additional inducements for would-be factory builders, such as tax holidays and exemptions from customs duties for those businesses who set up inside industrial zones such as the 2,400 hectare Thilawa project outside Rangoon.

With sanctions eased, Burma’s garment exports are up, topping US$1 billion in 2013, according to the MGMA, which hopes that exports will increase again to $1.5billion this year, as the apparel sector recovers to pre-sanctions levels.

However the costs and practical difficulties involved in running a factory in Burma mean that wages will likely have to remain low—at least until infrastructure such as roads and power are upgraded—if Burma is to remain competitive and pull in significant levels of foreign manufacturing investment.

“If a machine breaks, for example, there is no-one who can maintain or repair,” Yamazaki said.